TERMINAL FLOWER2 (TFL2) is the only homolog of heterochromatin protein1 (HP1) in the Arabidopsis genome. Because proteins of the HP1 family in fission yeast and animals act as key components of gene silencing in heterochromatin by binding to histone H3 methylated on lysine 9 (K9), here we examined whether TFL2 has a similar role in Arabidopsis. Unexpectedly, genes positioned in heterochromatin were not activated in tfl2 mutants. Moreover, the TFL2 protein localized preferentially to euchromatic regions and not to heterochromatic chromocenters, where K9-methylated histone H3 is clustered. Instead, TFL2 acts as a repressor of genes related to plant development, i.e. flowering, floral organ identity, meiosis and seed maturation. Up-regulation of the floral homeotic genes PISTILLATA, APETALA3, AGAMOUS and SEPALLATA3 in tfl2 mutants was independent of LEAFY or APETALA3, known activators of the above genes. In addition, transduced APETALA3 promoter fragments as short as 500 bp were sufficient for TFL2-mediated gene repression. Taken together, TFL2 silences specific genes within euchromatin but not genes positioned in heterochromatin of Arabidopsis.